The June launch of the London Stock Exchange’s TradElect trading system was an impressive riposte to new alternative trading systems spawned from the markets in financial instruments directive.

While projects such as Turquoise and Boat seek to bypass exchanges in trading shares or reporting trades, the LSE initiative – driven by its chief information officer David Lester – has shown there’s life in the old dog yet.

The system has increased the exchange’s trading capacity fivefold and doubled capacity on demand at less than one fifth of previous costs. TradElect is the culmination of a four-year technology project – a 300 man-year programme of work.

Lester, who is responsible for the information and technology services division, joined the LSE in 2001, having worked at Primark Corporation and Accenture.

His award for Best Personal Contribution in this year’s awards adds to his 2005 Financial News Rising Stars in European capital markets ranking. In his six years at the LSE, Lester has overseen projects including upgrades to the electronic trading platform, Sets; the introduction of an IP-based communications network and the implementation of a corporate data warehouse.

He is implementing a new information services diversification strategy, which will broaden the range of information products and services available to customers and increase revenues. But TradElect is his real triumph.

It enables the market to execute trades in about 10 milliseconds, while a blink of the eye is 300 milliseconds.

He said: “We believe this level of capacity and performance will increase trading volumes and introduce new high-frequency strategies in London. Such strategies deepen our liquidity pool and drive market efficiency.”

TradElect went live alongside Setsqx, the exchange’s new trading platform for less liquid stocks, and Performance Channels, an optional high-speed delivery mechanism that increases the rate at which data can be sent to the market.

In August, electronic trades had surged 141%, with trades on Sets exceeding the whole of last year.
Lester said as high-frequency algorithmic traders looked globally for pools of liquidity in which to find alpha opportunities, TradElect set new benchmarks in terms of system capacity and performance.

He said: “TradElect reflects the exchange’s strategic decision to replace its technology rather than take tactical steps to adapt the existing, outdated technology that most other market centres are using.”
This year the LSE will release Mifid and other TradElect enhancements that will double capacity.

While TradElect marks the end of the four-year technology programme it is, according to the exchange, “just the beginning of our ongoing development plans”.